China omits US dollar from forex trading fee waivers in bid to bolster yuan

China’s exchange regulator says waiving of transaction fees supports the national belt and road strategy, but Chinese banks still mainly use the US dollar in cross-border deals

The euro, British pound, Japanese yen, Hong Kong dollar and Australian dollar are also not exempt from trading fees

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China’s State Administration of Foreign Exchange has waived interbank transaction fees for a basket of 12 currencies, not including those of countries with whom China has tenuous relations. Photo: AP

Published: 5:37pm, 5 Aug 2020Updated: 10:43pm, 5 Aug 2020

China is waiving transaction fees between the yuan and 12 currencies, including the Singapore dollar, Russia rouble and Korean won, for three years in its onshore foreign exchange market in a clear move to skirt the US dollar.

China’s exchange regulator, the State Administration of Foreign Exchange (SAFE), said in a notice on Monday that it was waiving fees associated with bidding and asking prices in interbank trading of the yuan and the dozen currencies from August 1.

The other nine currencies are the Malaysian ringgit, New Zealand dollar, South African rand, Saudi riyal, United Arab Emirates dirham, Polish zloty, Hungarian forint, Turkish lira and the Thai baht.

The SAFE said the reason for waiving those trading fees was to “actively cooperate with the national belt and road development strategy, implement financial support for the development of the real economy, reduce corporate exchange costs, and promote the development of the direct exchange market for yuan and foreign exchange between banks”.

In addition to the US dollar, the euro, British pound, Japanese yen, Hong Kong dollar and Australian dollar are not covered by the fee exemption.